Shifting Consumer Trends From Legacy Solutions To Modern Options Aid Braze, Bullish Analyst Sees Profitability Ahead

Needham analyst Scott Berg reiterated a Buy rating on the shares of Braze, Inc. BRZEwith a price target of $50.

Braze reported better-than-expected Q1 FY24 results and solid guidance. The analyst notes that the company continued to see expansions, renewals, and new logo sales in the quarter, driving their strong revenue results.

The company reported Q1 revenue growth of 31.3% Y/Y to $101.8 million, which beat the consensus of $100.4 million. BRZE reported an adjusted EPS loss of $(0.13), better than the consensus loss of $(0.18).

The analyst applauds the company's "strong additions" across customer cohorts, benefiting from interest in Gen AI and customers seeking to modernize on an omnichannel customer engagement platform.

Braze expects Q2 revenues of $108.0 million - $109.0 million vs. consensus: $105.68 million and adjusted EPS loss of $(0.13) - $(0.14) vs. consensus of $(0.16).

Given the results, Berg sees Braze's sales as reasonably predictable and profitability as visible till FY25. 

The analyst also expects shifting consumer trends to drive customers from legacy solutions to more modern ones like Braze.

Price Action: BRZE shares are trading higher by 17.4% to $39.86 on the last check Friday.

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